CRANBURY, N.J. (DTN) -- New York Mercantile Exchange October West Texas Intermediate futures expired above $70 per barrel (bbl) but down on the session alongside lower settlements for nearest delivered oil products and Brent crude on the Intercontinental Exchange, pressured by a downward revision in world economic growth, increasing Russian oil production, and a tweet by U.S. President Donald Trump for the Organization of the Petroleum Exporting Countries to lower oil prices.
In its interim economic outlook released today, the Organization for Economic Cooperation and Development said, "The expansion may now have peaked," adding "with downside risks intensifying."
The Paris-based 35-country bloc organization for developed economies revised down its forecast for world economic growth for this year and 2019 by 0.1% to 3.7% from its outlook in May, up from 3.6% in 2017, adding "some emerging-market economies are facing significant headwinds from rising financial market pressures."
"Global trade growth slowed in the first half of 2018, with trade tensions already having adverse effects on confidence and investment plans," said OECD.
OECD maintained its forecast for the U.S. economy to expand at a 2.9% annualized rate for this year, up from a 2.2% growth rate in 2016, although revised lower its projection for the expansion in 2019 by 0.1% to 2.7%.
Oil futures were also pressured by increasing oil production from Russia.
"The Russian government reported that Russian oil production hit 11.3 million barrels a day, which exceeds the post-Soviet high set in 2016 before the OPEC pact," said Phil Flynn, senior market analyst with The PRICE Futures Group.
Russian officials will be in Algiers this weekend for an OPEC ministerial meeting, with reports indicating Russia will seek a 1.0-million-barrel-per-day (bpd) increase by OPEC and 10 non-OPEC oil producers in the production quotas. In 2016, the two groups allied in reducing their output to clear an oversupplied market, and by June were asked by large oil consuming nations including India, China and the United States to lift their production rate that had fallen well below agreed to quotas.
Involuntary production cuts by a handful of OPEC members, including Venezuela and Libya, and declining oil exports from Iran amid U.S. sanctions have tightened the global oil supply-demand balance. Combined with strong global demand that is expected to increase further in the fourth quarter has limited the world's spare capacity, which mostly resides in Saudi Arabia.
News reports suggest the Saudis are cool on the idea of hiking output too much for fear of re-inflating global oil inventory, and are said to be comfortable with a global oil price at $80 bbl. Iraq's oil minister will not attend the weekend meeting according to reports.
As he did earlier in the year, Trump tweeted a demand for OPEC to produce more, tweeting "The OPEC monopoly must get prices down now!"
The 4:13 a.m. EDT tweet and the OECD release prompted the first of three intraday selloffs by Brent and WTI futures, although the WTI contract remained supported by a weakening U.S. dollar, which tumbled to a 10-week low in index trading.
October WTI expired down $0.32 at $70.80 bbl, and at a nearly $0.50 bbl premium to November delivery. ICE November Brent crude futures settled down $0.70 at $78.70 bbl.
NYMEX October RBOB futures settled down 0.61 cents at $2.0146 gallon and October ULSD futures ended 1.86 cents lower at $2.2280 gallon.
Brian L. Milne can be reached at firstname.lastname@example.org
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